Patent reform legislation has now been introduced in both the House and the Senate. The provisions call for major reform and build on previously stalled measures designed to curb lawsuits and damages.

A bipartisan group of United States lawmakers have reintroduced legislation to overhaul patent litigation, claiming the changes are needed to push innovation in a faltering economy.

On Tuesday, Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) and Sen. Orrin Hatch (R-Utah), a senior member and former chairman of the Committee, and House Judiciary Committee Chairman John Conyers (D-Mich.) and ranking member Lamar Smith (R-Texas), introduced the Patent Reform Act of 2009.

“The legislation makes needed updates to the system that will improve patent quality and increase certainty among parties in litigation,” according to an announcement at Sen. Leahy’s Web site.

The push for the biggest changes in patent law in more than 50 years comes amid a wave of patent litigation that has accompanied the U.S.’s move toward a more knowledge-based economy. According to the most recent data available from the U.S. Administrative Office of the Courts, patent suits in the U.S. more than doubled to 2,706 new filings in 2005 from 1995.

The legislation builds on previously stalled measures designed to curb lawsuits and damages. The following are some of the proposed changes in the Senate bill, aimed at protecting inventors, improving patenting procedures and streamlining cumbersome litigation.

First to File
The bill shifts to a first-to-file system that credits invention based on the filing date of the patent application rather than on the date of actual invention. The provision eliminates the one-year grace period for most cases. “A patent may not issue for a claimed invention if the invention was patented, described in printed material or otherwise available to the public (1) more than a year before the filing date or (2) any time prior to the filing date if not through disclosure by the inventor or joint inventor,” a section-by-section summary of the bill states.

Thus, any independent third-party publication prior to filing is considered prior art regardless of the date of invention.

Right to Obtain Damages
This is the most contentious topic in the patent reform debate. The 2009 bill not only preserves the current rule that mandates that a damages award shall not be less than a “reasonable royalty” for the infringed patent, but further requires the court to ensure that, when a “reasonable royalty” is the award, it reflects the economic value of the patent’s “specific contribution over the prior art.” A provision states that a reasonable royalty may be calculated as the price of licensing “similar non-infringing substitutes in the relative market.”

In addition, the bill “improves the doctrine of willful infringement in both procedural and substantive respects,” the section summary stating that the current definition “perversely discourages parties from reviewing issued patents to determine whether a patent exists.” The provision codifies that treble damages are limited to instances where a judge finds that an adjudged infringer recklessly continued to infringe after receiving specified written notice sufficient to create declaratory judgment jurisdiction and without relying on reasonable advice of counsel.

Post-Grant Procedures
The bill includes expanded reexamination proceedings and offers additional post-grant review. Reexaminations may be requested based on published prior art, or evidence of prior public use or sale in the U.S. Section five of the bill “improves the inter partes reexamination system at the [U.S. Patent and Trademark Office] and creates a new administrative post-grant review for challenges to patents within 12 months of the patent’s issue or reissue,” the summary further states.

Basically, inter partes reexaminations would be heard by administrative patent judges, and the bill would clarify that parties would be estopped from filing inter partes reexamination requests after a district court judgment. Moreover, within 12 months of issuance, a third party can file a cancellation petition based on any ground of invalidity (rather than simply prior art). The administrative patent judges would also conduct the post-grant reviews.

In addition to these proposed changes, the 2009 bill:

• Does not require that all patent applications be published 18 months after they are filed;
• Does not require for Applicant Quality Submissions;
• Allows public use or sale in the U.S. to be reasons for challenging patents; and
• Allows fee diversion.

Lawmakers claim that clarifying patent rights protects innovators and will create jobs. Others say the bill doesn’t go far enough to protect the inventor.

The Senate Judiciary Committee has scheduled a hearing on the new legislation for March 10.

“A patent system developed for a 1952 economy, needs to be reconsidered in light of 21st century realities, while staying true to our constitutional imperative,” says a statement at Sen. Leahy’s Web site. “The patent laws that were sufficiently robust for promoting innovation and economic development are now actually impeding growth, harming innovators and raising prices on consumers.”

Earlier

A Call for Changes at the Patent Office

(Mis)Managing the Patent System

Patent Reform: David and Goliath

Obvious or Ingenious?

Resources

Patent Reform Act of 2009

Leahy, Hatch, Conyers, Smith Introduce Bipartisan, Bicameral Patent Reform Legislation
Leahy.Senate.gov, March 3, 2009

Leahy Statement On Bill Introduction
Leahy.Senate.gov, March 3, 2009

Section-By-Section Summary
Leahy.Senate.gov, March 3, 2009

Significant Changes To Judiciary-Committee-Approved Legislation
Leahy.Senate.gov, March 3, 2009

Patent Reform Act of 2009
Patently-O, March 3, 2009